Large-Cap Growth Award
Wedgewood Partners inc.
Large-Cap Focused
Growth Strategy
sk David Rolfe for the firm’s elevator
pitch and he has it at the ready.
“We’re big subscribers to the arguments put
forth by Charles D. Ellis, author of ‘The Loser’s
Game’,” begins Rolfe, chief investment officer of
St. Louis-based Wedgewood Partners. “Instead
of trying to time the markets and getting sucked
into short-term volatility, we take a long-term
view and let the markets work for us. Too many
of our competitors try to do otherwise, and we
refuse to play that loser’s game. That, quite sim-
ply, is our investing philosophy. ”
This longer-term view naturally leads to a big
belief in—and heavy reliance on—index invest-
ing which, as Rolfe notes, by definition is buy-
and-hold investing. This means the firm has a
history of minimum turnover in the portfolio. As
a corollary, Rolfe notes, this approach also affects
the firm’s stock selection.
“If we expect to invest in companies for many years, we
focus on those select companies with the brightest multi-year
prospects for growth,” he says. “Additionally, our view on risk
is contrary to the typical manager as well. We don’t view risk
via individual security price volatility, rather all of our risk
analysis is centered on the individual business.”
The second time’s the charm for the 22-year-old firm, as
Prima has previously recommended Wedgewood for an SMA
award. In recommending the firm this year, Prima said it was
“pleased the manager is looking to grow its business through
the SMA channel and is solely focused on the large-cap
growth strategy.”
With $875 million currently in assets under management,
Wedgewood believes consistent execution of their funda-
mental, long-term-focused research process coupled with
disciplined valuation can produce excellent long-term returns,
according to Prima. The strategy has delivered, producing
top quartile performance on an absolute and risk-adjusted
basis over the last three, five and 10 years. Wedgewood builds
A
David Rolfe, CIO
a concentrated portfolio of 18 to 22 stocks trading at a deep
discount to their estimated intrinsic value that are typically
driven by two factors: overly conservative consensus estimates and compressed valuation multiples.
Confirming Rolfe’s long-term views, Prima says
Wedgewood is a very patient investor focused on a three- to
five-year outlook which typically results in low turnover.
Over the past five years, portfolio turnover has ranged
between 30% and 53%, which contributes to its tax efficiency. Additionally, Wedgewood is able to accommodate tax
loss harvesting at client request, further improving potential tax efficiency. The firm was a strong candidate for the
large-cap growth SMA award due to its ownership structure,
talented and tenured investment team and consistency of
alpha generation.
The investment team includes Anthony Guerrerio,
president and founder; David Rolfe, chief investment officer;
Dana Webb, senior portfolio manager; and Michael Quigley,
portfolio manager.
